By: Samuel Pittman

**The Definition.**

By its technical definition, Median Income is the amount of income that divides the population in half. That is, half of the population has income below the Median Income and half the population has income above the Median Income. Median Income is important in the context of Bankruptcy because Congress has made Median Income an important number in determining eligibility for Chapter 7 Bankruptcy.

**Finding the Median Income.**

Within the Bankruptcy context, a debtor’s household income is a key number. The United States Census Bureau publishes Median Income figures for various household sizes in all fifty states. Before you file for Bankruptcy, in order to determine your eligibility for Chapter 7 Bankruptcy, we must compare your household income with the Median Household income in the state in which you reside. Median Income takes into account household size. For example, a married couple with two dependent children would compare their household income against the Median Income for a family of four. The Census Bureau provides Median Income by state for various household sizes, which can be found here: median income chart. The Census Bureau periodically updates these Median Income figures so it is important to make sure you are looking at the most recent figures.

**Why is Median Income Important?**

Most, but not all, debtors with income below the Median Income will qualify for a Chapter 7 Bankruptcy. However, if your income is above Median Income, you may still qualify for a Chapter 7 Bankruptcy. If your income is above Median Income, we will apply the “means test” to your case. The means test can be found on Form 122A-1 for Chapter 7 Bankruptcy and on Form 122C-1 for Chapter 13 Bankruptcy. The “means test” takes into account your household income and certain allowed household expenses to determine if you qualify for Chapter 7 Bankruptcy despite having income above the Median Income.

To understand how Median Income would impact your eligibility for a Chapter 7 Bankruptcy, please contact us to arrange a free consultation with one of our experienced Bankruptcy attorneys.